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EN BANC

[G.R. No. L-21146. September 20, 1965.]

RURAL BANK ! LUCENA, "NC., pet#t#o$er, %&. 'N. !RANC"SC ARCA, (& )*+e, Co*rt o !#r&t "$&t($e o

/($#(, Br($ " ($+ CENRAL BANK ! 'E 3'"L"33"NES, re&po$+e$t&.

REYES, J. B. L., J p:

!ACS

The Rural Bank of Lucena, Inc., a banking corporation organized under Republic ct !o. "#$, in%tituted an actionto collect da&age% and to en'oin the (entral Bank fro& enforcing Re%olution !o. )#* of it% +onetar Board, finding that

the Rural Bank of Lucena -Lucena for %hort, through it% officer%, director%, and e&ploee%, had co&&itted act%

%ub%tantiall pre'udicial to the /o0ern&ent, depo%itor%, and creditor%, and directing Lucena to reorganize it% board of

director%1 to refrain fro& granting or rene2ing loan%, or accept ne2 depo%it%, and not to i%%ue draft% or &ake di%bur%e&ent%2ithout the appro0al of the %uper0i%ing (entral Bank e3a&iner%1 and threatening Lucena that it% &anage&ent 2ould be

taken o0er if the latter %hould fail to co&pl 2ith the re%olution. fter i%%ue 'oined and trial of the ca%e, and 2hile the

litigation 2a% %till undecided b the (ourt of 4ir%t In%tance, the +onetar Board, ha0ing been infor&ed that the 5irector of

it% 5epart&ent of Rural Bank% reco&&ended the li6uidation of the Rural Bank of Lucena, adopted on 4ebruar #, 7)8# it%Re%olution !o. 7## -9etition, nne3 ( ;

To re6ue%t the Solicitor /eneral, pur%uant to %ection #) of Republic ct !o. #8

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!>. There i% no irreconcilable conflict bet2een %ection 7$ -a% a&ended of Republic ct !o. "#$ -Rural Bank%ct and %ection #) of Republic ct !o. #8< -(entral Bank ct. Chat the for&er %ection authorized i% the take o0er of the

&anage&ent b the (entral Bank, until the go0erning bod of the offending Rural Bank i% recognized 2ith a 0ie2 to

a%%uring co&pliance b it 2ith the la2% and regulation%. ?pon the other hand, %ection #) of the (entral Bank ct ha% in

0ie2 a &uch &ore dra%tic %tep, the li6uidation of a rural bank b taking o0er it% a%%et% and con0erting the& into &one topa off it% creditor%.

Section #) of Republic ct !o. #8< -(entral Bank% ct applie% to rural bank% organized under Republic ct "#$,

2hene0er the +onetar Board %hould find that the rural bank affected i% in%ol0ent, or that it% continuance in bu%ine%% 2ouldin0ol0e probable lo%% to it% depo%itor% or creditor%, and that it can not re%u&e bu%ine%% 2ith %afet.

?nder %ection 7$ of the Rural Bank% ct, the +onetar Board &a not take o0er the &anage&ent of a rural bank

2ithout gi0ing the latter a hearing i.e., an opportunit to rebut the charge that it ha% contra0ened applicable la2%, rule% and

regulation% to the %ub%tantial pre'udice of the go0ern&ent, it% depo%itor% and creditor%. Such pre0iou% hearing i% no2herere6uired b %ection #) of the (entral Bank la2. +anife%tl, 2hether a rural bankA% continuance in bu%ine%% 2ould in0ol0e

probable lo%% to it% client% or creditor%, and that it can not re%u&e bu%ine%% 2ith %afet, i% a &atter of appreciation and

'udg&ent that the la2 entru%t% pri&aril to the +onetar Board. 4or thi% rea%on, the %tatute ha% pro0ided for a %ub%e6uent

'udicial re0ie2 of the +onetar Board, in lieu of a pre0iou% hearing. Such re0ie2 &u%t be a%ked 2ithin ten da% fro& noticeof the re%olution of the Board.

In ca%e 2here the (entral Bank, a% li6uidator, petition% the (ourt of 4ir%t In%tance for a%%i%tance in the li6uidation

of the affair% of the rural bank%, the court cannot in6uire into the &erit% of the ca%e before i%%uing an order re6uiring the

%urrender of the a%%et% and paper% of the rural bank. ?nder the fourth paragraph of %ection #) of Republic ct !o. #84 TE 4>RE/>I!/, the 2rit applied for i% denied, 2ith co%t% again%t the petitioner Lucena Rural

Bank, Inc.